Read on Twitter
Peter Lynch's Cocktail Party Theory
The stock market stages and how to predict them by drinking cocktails at parties
/THREAD/
The stock market stages and how to predict them by drinking cocktails at parties
/THREAD/
1/ Peter Lynch was a legendary investor.
He didn't use complex investing methods and definitely didn't use any trading algorithms to predict the stock market movements.
Instead, he attended cocktail parties and observed the attendees while sipping on his fancy drink.
He didn't use complex investing methods and definitely didn't use any trading algorithms to predict the stock market movements.
Instead, he attended cocktail parties and observed the attendees while sipping on his fancy drink.
2/ The first type of cocktail party is at the first stage of an upward market after it has taken a big drop.
It has been down for a while and nobody expects it to rise anytime soon.
It has been down for a while and nobody expects it to rise anytime soon.
3/ People at the party don't talk about stocks, and if you mention anything about investing or the stock market they either yawn or wander away.
If they stay, they change the subject to basketball, politics, the weather, or ask the attending dentist about an appointment.
If they stay, they change the subject to basketball, politics, the weather, or ask the attending dentist about an appointment.
4/ When people are more interested in tooth plague than stocks, you know the market has reached a bottom and is about to turn up.
5/ At the second party, the market has moved up 15% from the first party, but still few pay attention.
If you mention stocks, your new acquaintances might stay a little longer this time to discuss it.Â
A few minutes later they will talk again to the dentist about plague.
If you mention stocks, your new acquaintances might stay a little longer this time to discuss it.Â
A few minutes later they will talk again to the dentist about plague.
6/ At stage three, the market is up 30% from stage one.
The crowd of the attendees start ignoring the dentist and start circling around.
The crowd of the attendees start ignoring the dentist and start circling around.
7/ A few might try to ask for some stock recommendations. Even the dentist.
Almost everyone at the party has invested some money and is talking about it.
Almost everyone at the party has invested some money and is talking about it.
8/ In the last stage, and last cocktail party, the crowd is even more enthusiastic than last time.
But this time they don't ask for stock tips.
But this time they don't ask for stock tips.
9/ They are now telling you which stocks YOU should buy.
Even the dentist has a few picks to offer.
Even the dentist has a few picks to offer.
10/ You check the names and see they went up 10-20% last week.
Even random acquaintances and neighbors start giving you investing advice.
Even random acquaintances and neighbors start giving you investing advice.
11/ It is now time to finish your drink, leave the party and get out of the market.
It will soon reach the top and tumble down again.
/END/
It will soon reach the top and tumble down again.
/END/
If you liked this thread click below and retweet the first tweet, and follow to stay updated. https://twitter.com/itsKostasWithK/status/1352261029888192512?s=20
For more educational threads on financial independence and investing for beginners see below for a collection of threads 
https://twitter.com/itsKostasWithK/status/1345790210441928708?s=20
https://twitter.com/itsKostasWithK/status/1345790210441928708?s=20
